great read | Irrational Exuberance

Rational exuberance | Irrational Exuberance | Robert J. Shiller

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	• Irrational Exuberance Robert J. Shiller Broadway Business, 2006 - 336 pages average customer review:based on 91 reviews view larger image
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highly recommended

Credible Exposition

The author first mentioned the twelve precipitating factors
for a bubble. Precipitating factors like capitalism explosion
and ownership society, new information technology, supportive
governmental monetary policies and analysts' optimistic forcast.

This ultimately resulted in a feedback loop which amplified
the 'story' behind the stock or even in a painting like Mona
Lisa. If a stock or any investment had a strong credible story
behind it, the story greatly enhanced the value of the investment.

How was this possible? It was through the channels of the media
and word-of-mouth. Word-of-mouth was cited to be more potent
though less accurate. The analogy of how ants communicate and
how epidermics spread was used to desbribe how bubbles formed.

"New-era thinking' was another reason bubbles formed. The advent
of automobiles and radio in the '20s; the television in the '50s;
and the internet in the '90s.

The book is well structured and support material is sufficient
to prove its point. One gripe is the complex and cumbersome
sentence syntax used. Commas were missing where they could be
inserted to make reading easier.

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great read

this is a very good book from an economist who has a balanced view on social and behavioral economics.
He is one of the very few grounded economist that i know of.

Rational exuberance

This book does not quite work because the author gives us no algorithm to determine when the market is irrationally exuberant or merely going up.

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Great Book for the Times

This book tries to get at the heart of what causes bubbles. Schiller is honest that there is no one cause that can be purely attributed the to building of a financial bubble nor does he contend that the bursting of a bubble can be predictable. He uses examples from all the major stock market crashes from the past century. Part of focus is on the media and its influence on the generals public attitude towards various asset classes, mostly stocks and housing. Its a great reference to have if you think another bubble is on the verge of building as the book cites repeated themes that can be seen in the media that occurred in other bubble creation.

Great read. Won't get your rich (at least now) because we just missed one of the largest bubbles ever to be seen in housing. However, if humans are still running the world for the next 50 years be assured we'll have some more bubbles to come.

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As Robert Shiller?s new 2009 preface to his prescient classic on behavioral economics and market volatility asserts, the irrational exuberance of the stock and housing markets ?has been ended by an economic crisis of a magnitude not seen since the Great Depression of the 1930s.? As we all, ordinary Americans and professional investors alike, crawl from the wreckage of our heedless bubble economy, the shrewd insights and sober warnings, and hard facts that Shiller marshals in this book are more invaluable than ever.

The original and bestselling 2000 edition of Irrational Exuberance evoked Alan Greenspan?s infamous 1996 use of that phrase to explain the alternately soaring and declining stock market. It predicted the collapse of the tech stock bubble through an analysis of the structural, cultural, and psychological factors behind levels of price growth not reflected in any other sector of the economy. In the second edition (2005), Shiller folded real estate into his analysis of market volatility, marshalling evidence that housing prices were dangerously inflated as well, a bubble that could soon burst, leading to a ?string of bankruptcies? and a ?worldwide recession.? That indeed came to pass, with consequences that the 2009 preface to this edition deals with.

Irrational Exuberance is more than ever a cogent, chilling, and astonishingly far-seeing analytical work that no one with any money in any market anywhere can afford not to read?and heed.

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